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6 Financial Decisions After Losing a Loved One

Key takeaways

Hiring an experienced attorney may save you time, money and stress.
Consider opening a separate account to cover funeral expenses and assorted taxes.
Bank accounts, insurance policies, investments—these must be closed or assigned to someone else.

In the event of losing a loved one, some tough financial choices will follow. Here’s what to consider, along with six decisions you’ll have to make, in the days following your loss.

When you lose a loved one, or know you are about to, the last thing on your mind is money. Unfortunately, in the wake of this loss, you’ll have to respond to any creditors, as well as representatives of insurance companies, your state government, the federal government, investment companies and a host of other entities, in a timely manner.

These tips can help you navigate some of the financial complexities of your dear one's death.

1. Decide who should get letters testamentary or letters of administration

These documents give the holder authority to wrap up the deceased's financial affairs. For example, if you want to take care of your spouse or partner’s final bills and obligations, you must go to your local courthouse with a will or death certificate, and ask for documentation to designate you as executor or administrator of the estate.
2. Select a bank to open an estate account

You may need this account to pay for funeral expenses and a memorial service, as well as to pay property taxes and income taxes. Contact the IRS Opens in new window to get a tax ID number for the estate, then open the bank account under that number.
3. Choose who will make sure all death benefits are paid

Decide whether you, someone you have hired or a family member will look into all death benefits that are due.

Either you or the designated person will find out if there is a pension and/or an insurance policy naming a spouse or other beneficiary, or if veterans benefits are owed.

Also, you or a designated person would need to apply to the Social Security Administration Opens in new window for a lump-sum death benefit and any survivor benefits that may be due.
4. Decide if you’re going to hire an attorney

Even though you may balk at the expense, an experienced estate attorney could save you money and headaches, and relieve the burden of navigating through a will or trust. Also, an attorney can inform you of your legal responsibilities if you are executor of a will or administrator of the estate. This could help you avoid potential mistakes in handling these roles.
5. Choose the accounts that must be closed or assigned to someone else

In particular, pay attention to these types of accounts:
- Bank or credit union accounts
- Credit or debit cards
- Safe deposit box
- Financial accounts (IRA, stocks, bonds, etc.)
- Utilities
- Phone and internet accounts
- Insurance policies
Important: If your loved one had Social Security payments automatically deposited into a checking account, you must notify the Social Security Administration Opens in new window immediately. (It’s illegal to continue to accept Social Security checks for someone who is deceased.)
6. Consider hiring an accountant to help prepare the taxes for your loved one's estate

A final tax return must be filed—and any taxes due be paid—for your loved one. And because tax laws are complex and change frequently, an accountant who’s familiar with both federal and state estate taxes and regulations could save you time and money.

What you can do next

Financial matters can be overwhelming when you’re dealing with the loss of someone you love. Before you choose to take on the myriad accounts, liabilities, distributions and obligations that arise, consider what’s involved both practically and emotionally. A financial professional can help you see the big picture and assist with personal goals and the assorted documents you may need at this difficult time. Please consult your tax and legal advisors regarding your particular circumstances.

Kevin Johnston writes about personal finance, investments, financial management and planning. His work has appeared in the New York Daily News, New York Post, San Francisco Chronicle and Houston Chronicle, among others.

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6 Financial Decisions After Losing a Loved One

Key takeaways

1. Decide who should get letters testamentary or letters of administration

2. Select a bank to open an estate account

3. Choose who will make sure all death benefits are paid

4. Decide if you’re going to hire an attorney

5. Choose the accounts that must be closed or assigned to someone else

6. Consider hiring an accountant to help prepare the taxes for your loved one's estate

What you can do next

Footnotes

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